How Do We Deal with Car Finance?

If you are worried about financing your next purchase of a new or used car, you can read the following information about car finance to guide your decision.

If you are worried about financing your next purchase of a new or used car, you can read the following information about car finance to guide your decision. When it comes to financing, one of your mistakes may cost you hundreds or even thousands of dollars. Therefore, don't let the bright appearance of the car obscure your financial vision. In fact, in addition to online financial management, you can do more.

You actually want to buy a car and a sum of money

It's easy to focus on the car you want to buy. But in fact, you are buying a car and financing it. If you mix these two things, you may pay more. This is the most important fact about financing. Auto loans can be obtained through dealers, banks, credit cooperatives, and financial companies. The best way is to shop around and get the pre-approval of the loan before entering the dealer so that you can weigh all car finance opportunities.

Short term and high benefit

Choosing a loan with a lower monthly repayment and repaying it in installments, such as six years, sounds tempting, but it's far from cost-effective. If the loan term is long, due to interest problems, thousands of dollars will be paid for the same loan amount compared with short-term loans. Generally speaking, the interest rate of short-term financing is also low. Experts recommend financing for the shortest period you can afford. Think about four or five years, not six or more.

Good credit is rewarded

Your credit score provides an in-depth understanding of your credit history and indicates the level of loan risk that financial institutions can expect to lend you money. If your credit score is low, which indicates that your risk is higher, you will pay higher interest rates and may need a more down payment to appease the lender. If your credit score is high, you will have the opportunity to get the best auto financing options and even zero interest rate financing through the manufacturer. It's best to check your credit score long before applying for a loan so that you have enough time to rebuild your score or correct errors in your credit report.

Down payment drives savings

When buying a car, a large down payment can be painful at first. But in the long run, this is good. The car will depreciate. Before you realize it, you may owe more money than its value. This is the so-called "negative equity", which is the side effect of long-term and small down payments. The more money you pay, the faster you will reach a positive net asset value and the lower your monthly payment will be. Car transactions help to further reduce payments. Just make sure to negotiate your deal separately from the purchase price and financing plan.

The accurate mathematical calculation is conducive to car finance

Carmakers often offer many attractive offers, including cash rebates and zero-interest financing, to make current car transactions more attractive. But how do you know which deal is the best? At this time, you should not dream but do accurate mathematical calculations. For example, compare two loans of 36 months / US $20000. One is zero interest rate financing, the other is a 6% interest rate and $2000 cash return. Zero-interest rate financing sounds like a clear winner. But cash rebates are actually better deals; Other factors are the same. However, in other cases, zero interest rate financing may be better.

Anna Black

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